Sir Ivan Menezes: Boss of Guinness maker Diageo dies at 63

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Diageo chief executive Ivan Menezes speaks at a summit in London in 2022.Reuters
By Annabelle Liang
Business reporter

Sir Ivan Menezes, chief executive of the world’s biggest spirits company Diageo, has died aged 63.

On Wednesday, the Guinness and Johnnie Walker maker said he “passed away following a brief illness, with his family at his side.”

The British-American national was born in the Indian city of Pune. He was set to retire at the end of the month.

Earlier this week, the firm said Menezes was in hospital for conditions including a stomach ulcer.

“This is an incredibly sad day. Ivan was undoubtedly one of the finest leaders of his generation,” Diageo chairman Javier Ferrán said.

“Ivan was there at the creation of Diageo and over 25 years, shaped Diageo to become one of the best performing, most trusted and respected consumer companies,” Mr Ferrán added.

Prior to Diageo, he held marketing and strategy positions at major companies including food and beverage giant Nestlé.

Menezes joined Diageo in 1997 when the firm was formed through the merger of brewery giant Guinness and London-based conglomerate Grand Metropolitan.

Over the course of his career, he held several senior roles at Diageo.

As the firm’s global marketing director, he was behind the iconic Johnnie Walker “Keep Walking” campaign, which was launched in 1999.

The Scotch whisky brand has continued to run the campaign saying it “embodies our desire for progress, the fuel to tackle adversity, and the joy of unfiltered optimism.”

In 2012, Menezes was named as an executive director of Diageo and appointed to the company’s board. He was promoted to chief executive a year later.

Under his leadership, the company’s sales grew as it bought several brands, including Philippine rum brand Don Papa.

Diageo currently has more than 200 brands, which it markets in over 180 countries.

The firm’s latest annual earnings showed a jump in sales as more people made cocktails at home during the pandemic.

Earlier this year, the company announced that Menezes planned to retire on 30 June, after a decade as its chief executive.

He was set to be succeeded by chief operating officer Debra Crew.

On Monday, Ms Crew was appointed as Diageo’s interim chief executive as Menezes was undergoing medical treatment.

He was awarded a knighthood in King Charles’ first New Year Honours for services to business and equality.

Menezes is survived by his wife, Shibani and their two children, Nikhil and Rohini.

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The Positive Impact of Fintech in Serving the Underserved Community

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Ideal solutions that are more accessible, affordable, convenient
Boost’s cross-border payment ecosystem brings together the underserved

Access to financial services is a fundamental component of economic growth and social development. Unfortunately, a significant portion of the global population, particularly in emerging markets, remain underserved or excluded from formal financial services. This could…Continue Reading

Why Japanese equities are attracting foreign investors

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International investors are likely to increase their exposure to Japanese equities or, indeed, consider including them in their portfolios for the first time this year and beyond.

The reason is that the world’s third-largest economy is experiencing inflation that reached a four-decade high in February and continues to run hot.

Sharp price gains are rarely desirable, but Japan is an exception after bouts of deflation since the late 1980s and early 1990s.

Japan has been grappling with a persistent problem of low inflation and deflation for several decades for four main reasons. 

First, it has an aging population and a declining birth rate, which has led to a shrinking workforce and reduced consumer spending. With fewer people entering the workforce and spending less, there is lower demand for goods and services, resulting in stagnant prices.

Second, Japan has experienced prolonged periods of economic stagnation, characterized by sluggish growth and weak consumer and business spending. This has limited the potential for inflationary pressures to build up.

Third, the country has one of the highest debt-to-GDP ratios among developed countries. To manage this debt burden, the government has implemented accommodative monetary policies, including low interest rates and quantitative easing. While these policies aimed to stimulate economic growth, they have not translated into significant inflationary pressures.

And fourth, Japan has faced structural challenges in its economy, such as excess capacity in certain industries, weak productivity growth, and limited wage increases. These factors have contributed to a lack of upward pressure on prices.

Economic recovery

However, in more recent times, as the economic recovery continued amid supportive monetary and fiscal policies and a surge in tourism, inflation has surged.

For this reason, cash is no longer king as the rising prices are eroding Japanese investors’ purchasing power.  

As such, they’re increasingly looking for alternatives, and we expect Japanese equities are going to be the go-to as a way to preserve or even increase the real value of their investments.

Equities are often seen as a potential hedge against inflation. When prices rise, the value of a company’s revenue and earnings may increase, leading to higher stock prices. 

Should Japanese investors pile into the Tokyo and Osaka exchanges, equity values will naturally increase, and this will pique the interest of international investors looking to further diversify their portfolios to seize opportunities and mitigate risk.

Japan experienced a prolonged period of economic stagnation in the 1990s and 2000s, often referred to as the Lost Decades. This era was characterized by low economic growth, deflation, and a weak stock market. The negative perception of Japan’s economy during this time seriously deterred international investors from considering Japanese equities.

In addition, historically, Japan’s corporate governance practices and transparency standards were considered relatively weak compared with other developed economies. This lack of transparency and shareholder-friendly practices made some would-be overseas investors cautious about investing in Japanese companies.

Plus, of course, equities in Japan have not consistently outperformed other global equity markets in recent years.

But as values are likely to rise as investors shed cash and fixed-income investments because of rising inflation, this trend for overlooking Japanese stocks will be reversed.

Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.

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Singapore committed to decarbonisation goals while uplifting workers in the transformation: Grace Fu

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During her keynote address, Ms Fu said that Singapore is committed to meeting its national climate target to achieve net zero emissions by 2050. 

Citing a report that mentioned finance, technology and international cooperation as three critical enablers for accelerated climate action, Ms Fu elaborated on how Singapore could contribute in these aspects. 

Singapore must accelerate the development of decarbonisation technologies to make them commercially viable in order to harness their potential for decarbonisation at scale, Ms Fu said. 

She raised the example of low-carbon hydrogen as a potential alternative to fossil fuels in the maritime and aviation sectors. Hydrogen can potentially supply up to half of Singapore’s power needs by 2050, she said. 

“More importantly, it has the potential to unlock global energy trade, through its carrier forms that can be stored and transported over long distances. This will connect regions with abundant low-cost renewable energy with those that have limited renewable energy potential. 

“However, the technology and supply chains are still nascent, and large-scale deployment has not yet been demonstrated.”

Another problem was the shortfall in funds to finance net zero goals. The solution to address this, Ms Fu said, is the scaling of blended finance, which is public, multilateral, or philanthropic funding “coming in as catalytic capital, to improve the bankability of green projects and encourage private investments”. 

The development of credible carbon markets is another breakthrough in finance, as carbon credits are key instruments that “channel financing to mitigation projects which would otherwise not be bankable nor implementable”, said Ms Fu. 

“(Singapore) will allow companies to use high-quality international carbon credits to offset up to five per cent of their taxable emissions from next year onwards. This could spur local demand in carbon markets, hence supporting the growth of a vibrant international carbon market and channel financing to mitigation projects internationally,” she added. 

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Thai stock exchange completes infrastructure upgrade | stock exchange of thailand, set, nasdaq, technology, upgrade, infrastructure | FinanceAsia

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On Wednesday (May 31) Nasdaq and the Stock Exchange of Thailand (SET) announced the launch of a new trading system that is set to provide improved function and efficiency across capital market dealflow and execution.

The upgraded infrastructure is built on Nasdaq-conceived technology that draws on state-of-the-art, in-built market data distribution and surveillance systems which support increasing transaction volumes and product varieties.

“Nasdaq has had a longstanding partnership with SET, having provided technology solutions to the exchange for over a decade. This announcement marks the successful completion of a technology upgrade programme that began in 2019,” Roland Chia, executive vice president and head of Marketplace Technology at Nasdaq, told FinanceAsia.

“It facilitates efficient system integration with widely adopted interfaces based on global standards for order entry and market data, including ITCH and OUCH.”

He shared that following the recent successful launch, SET has plans to integrate additional capabilities into its workflow, including Nasdaq’s Pre-Trade Risk Management, Index calculator, Data platform and other Market Surveillance solutions.

In the announcement, SET president Pakorn Peetathawatchai explained that the new system was inaugurated by the Thailand Futures Exchange last month and achieved a “smooth transition”. He reported particular success in terms of improved efficiency and faster order management. 

In a video discussing the infrastructure upgrade, Thirapun Sanpakit, head of SET’s Information Technology division, highlighted the development’s capacity to “boost the competitiveness of the Thai capital market.”

“We believe the solution will enable our customers to achieve the fastest time to market. While also minimising total cost of ownership,” he said.

Sanpakit explained that the upgrade reduces roundtrip order latency to under 40 microseconds and said that it would support the bourse’s pursuit of new product launches. He detailed callable bull-bear contracts (CBBC) in the equity market, and single stock options in the Thailand Future Exchange (TFEX) derivatives market, as likely to go live in the near future.

The Thai bourse boasts the highest liquidity among Asean-based exchanges – a position it has maintained for over a decade. In 2022, capital raised through IPO totalled $3.46 billion, the highest volume among Asean exchanges and fourth largest in Asia after China, South Korea and India. According to Sanpakit, the exchange handles a daily trading volume of $2.5 billion. 

SET was not able to comment beyond the press release prior to publication.

 

¬ Haymarket Media Limited. All rights reserved.

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SE Asia’s economies in a perilous US-China middle

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Assessments of Southeast Asia’s economic outlook published by the Asian Development Bank and the International Monetary Fund in 2023 find reasons for optimism. “Developing” Asia, they conclude, will lead the world in economic growth over the next two years.

Southeast Asian economies weathered the pandemic relatively well, notwithstanding hardship due to lockdowns. The geopolitical challenges brought by increasingly antagonistic competition between the United States and China are a looming threat to the region’s prosperity, but so too are the perverse growth effects of protectionist policies.

Southeast Asia has benefited from limited decoupling between the Chinese and US economies, as manufacturers move some production processes out of China to avoid tariffs and blacklists. Although some relocations have taken the form of “re-shoring”, more investment has moved to other Southeast Asian countries. 

Singapore, Vietnam, Malaysia and Indonesia registered relatively strong inflows of FDI in the last two years. Competition among external powers has also provided Southeast Asian elites with bargaining leverage in infrastructure projects and access to finance.

But beneath these recent developments, there is a deeper structure that will shape the Southeast Asian experience of increased geopolitical tension.

First, there is the basic openness of economic development in Southeast Asia. The region’s growth and industrialization depends on external markets and foreign investment. High growth has mostly occurred when “internationalist” coalitions advanced their core interests and create access to international markets and investment.

Southeast Asian countries also showcase a tremendous variety of domestic institutions — the structures and embedded rules that guide action and make it more or less possible to carry out different development tasks. 

Specifically, state and private sector institutions shape the ability of individuals and companies to overcome problems of coordination, commitment and collective action. Countries that fail to overcome such problems typically fail to provide sustainable economic development.

People move past a clothing boutique selling locally made products in downtown Hanoi on October 29, 2014. A EU-Vietnam Free Trade Agreement promises to boost Vietnamese exports and growth. AFP / Hoang Dinh Nam
A clothing boutique selling locally made products in downtown Hanoi. Photo: AFP / Hoang Dinh Nam

Given Southeast Asia’s institutional variety, we can expect continued unevenness in how countries in the region will respond to current geopolitical challenges and opportunities.

Some are better equipped than others to benefit from supply chain restructuring and investment shifts motivated by the desire to secure supplies or protect against geopolitical risk. 

Mineral endowments coupled with nationalist policies have motivated recent investments in Indonesia, while Thailand’s established capabilities in the automotive sector make it an appealing investment site for Chinese and other investors seeking to diversify.

Southeast Asian responses to geopolitical change will also be mediated by political pressures within each country. In addition to the persistent risk of institutional corrosion due to rent-seeking elites, governments face the challenge of integrating broader political movements. 

Challenges “from below” include calls for greater redistribution of wealth, for the abandonment of export-driven political economies in favor of greater domestic consumption and for more attention to poverty alleviation. The environmental limits to extractive growth strategies — along with the effects of climate change — also create challenges.

Elite responses to these challenges vary enormously, from attempts at greater inclusivity to the mobilization of vertical allegiances that seek to displace material grievances through the politicization of race, religion or royalty.

Finally, it matters that the region is grappling with more than a transitory escalation in competition between great powers. Southeast Asia faces the challenge of weathering the power transition in East Asia. 

For the past 30 years, the region has prospered through increased integration into a Chinese-centric regional economy, while the United States’ security role limited concerns over asymmetric interdependence. 

But this strategy is not sustainable. The gravitational force of the Chinese economy – along with the political appeal of the Chinese development model – remains significant.

In contrast, the US security role is under pressure. Even prior to the rise in US-China tension from 2017, domestic political and economic constraints within the United States have made it less willing and able to prolong the status quo. Increases in Chinese military and technological capacity add to this structural shift.

A general conclusion is that the region’s development strategies and growth trajectories are subject to both internal and external pressures.

Currently, a degree of “friend-shoring” in supply chains and increased US-China competition have benefited some parts of Southeast Asia. But the positive spillovers stemming from geopolitical tension create increased points of potential entanglement and vulnerability.

In this file photo taken on August 26, 2020, a worker inspects disposable gloves at the Top Glove factory in Shah Alam on the outskirts of Kuala Lumpur. Photo: AFP / Mohd Rasfan

While some firms may be forced to choose which side of any “economic iron curtain” they will stand on, others have invested in dual supply chains to serve decoupled technology spheres. In doing so, they take a bet on the continued willingness of both the United States and China to tolerate this duality.

Southeast Asian countries – enmeshed in cross-border investment and trade relationships that cut across geopolitical rifts – have effectively made the same bet. 

Samsung’s extensive investments in Vietnam, for example, are reinforced by a coalition of supporting interests that depend on Samsung’s status within the United States’ sphere of non-suspect entities. At the same time, the Vietnamese economy relies substantially on supply chain linkages to China.

This structure of connection will expose countries in the region if the security concerns of external powers escalate further. Beyond strictly business ties, potential reprisals, blacklists and sanctions could also threaten cross-border collaborations involving firms, research institutes, universities and government agencies. 

These connections mean that there is ample and increasing scope for US-China conflict to play out in Southeast Asian local economies.

Natasha Hamilton-Hart is Professor in the Department of Management and International Business at the University of Auckland and Director of the New Zealand Asia Institute.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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Prigozhin’s ‘warrior class’ threatens Putin from the Right

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Yevgeny Prigozhin, the creator of Wagner Private Military Company( PMC ), gave another of his fierbrand interviews as he declared victory in the Bakhmut battle.

He vehemently denounced the Russian defense minister and his chief of staff, Russia’s” heavy state ,” which included the political administration, the” quasi-defense” establishment, and the elites who protect their children from the front lines of battle.

He admitted that he doesn’t know why the war in Ukraine is being fought, but added that” as long as there is a battle, we have to battle it well.” How Prigozhin gets away with it when people are receiving jail terms for much milder criticisms begs the question of how he spoke the terrible truth in this.

He represents the opinions of a sizable portion of Soviet culture, is the answer. These people support conflict, but they criticize how it is fought and are disgusted by the corruption and incompetence that have claimed the lives of soldiers.

Those who can work politically and, if necessary, forcefully, giving Prigozhin a sense of common resonance, share this anti-elite but” nationalistic” sentiment.

The” heroes” of the so-called Russian Spring, the men who participated in the insurgency in Donbas starting in 2014, stand out among these figures. The widespread belief in the west is that this uprising was solely a Kremlin plot.

However, my conversations with field officers and officials like Igor Strelkov( real name Girkin ) suggested then. Many of these officers were driven by personal views; they dreamed of creating a brand-new” Novorossiya” in eastern Ukraine that idealized Russia, as opposed to the crony capitalism that defines Putin’s Russia.

I was certain that they were sincere in their ideas and willing to sacrifice both their own and other women’s lives for a greater cause. I’ve come to believe that this group does play a part in any dire situations, and it might soon happen.

The Russian state, which at first was unsure of how to handle these strongly pro-Russia but disorderly individuals, came to understand that they could pose a threat. Since 2017, they have begun to get repressed.

Rightwing Russian nationalism’s primary website academic tool, Sputnik-i-Pogrom, was blocked, and its director Yegor Prosvirnin passed away in dubious circumstances in 2021. Those who did survive were kept in the dark about politics and the media, so they focused their efforts on” milblogging.”

Men who enjoy fighting

These are men who adore conflict and everything associated with it, including the tools, strategies, traditional battles, wargaming, attire, and thrills of combat. They are present in all societies, but in Russia, the action in Ukraine gave them the opportunity to rise to social fame.

These” online warriors” emerged from the shadows and entered politics. Big audiences are drawn to their resources on the well-known software Telegram.

More people in Russia have subscribed to channels like Rybar( 1.13 million subscribers ), WarGonzo( 1.3 million ), and Igor Strelkov, the former” minister of defense” of the self-declared Donetsk People’s Republic( 790.000 ), who started the initial uprising in 2014.

In a film released earlier this year, Yevgeny Prigozhin, the leader of the Wagner group, can be seen speaking in Bakhmut. Photo: @ concordgroup_ official / Telegram channel

They identify as voenkory, or war correspondents, and engage with their people by posting articles and videos. Viewers value their frank assessments of the reality on the front lines, their knowledgeable sources, engaging news, and engaging guests.

Social feelings are important, and the” soldiers” have developed a popular sub-culture. It has its own legends, including Vladlen Tatarsky( Maxim Fomin ), who stole money, served time, escaped from jail after being shelled by a tank, participated in the Donbas uprising, wrote three memoir books, and served as the channel’s host. In a recent targeted burst, he was killed. Even if it was a brief experience, war was an experience worth having for Tatarsky and those like him.

Tatarsky was involved in the YouTube channel” Reverse Side of the Medal ,” which promotes military garb and insignia like the Wagner group’s red skull and two mortar shells, which have gained popularity as a badge of honor.

clash of cultures

Thus, two very different military cultures collide: a rigid and top-heavy ministry of defense establishment that is supported by the state, and the guerrilla tactics of volunteers and private military companies( PMCs ) that rely on initiative and improvization.

These two teams are afraid of one another. The defense ministry has been reticent to give Wagner a lot of weapons. Prigozhin criticizes them for the defense failure in the meantime. Putin, meanwhile, observes and seems to like the generals’ opposition.

The state may have to rely on this” warrior” district both on the front lines and to help keep a pro-war momentum in society, so it cannot afford to placate them. However, the Kremlin is even aware of the dangers involved because” warriors” like Prigozhin can be difficult to handle and may grow ambitious.

Individual enmities and divergent perspectives on the future of Russia exist, and their camp is not consistent. However, signs of a social force that could affect Russia’s post-Putin results are starting to take shape.

This district will be the one most willing to take action if an internal turmoil— such as Putin’s sudden death, for instance— opens a window of opportunity and the ruling elite loses power. They will have access to organizational, economical, and advertising resources thanks to people like Prigozhin.

Prigozhin may rise to the position of functionary, even if he is not a monarch. Therefore, we must look beyond merely observing the Kremlin’s hands in all directions to identify autonomous actors who have the potential to move and shake the new order.

At King’s College London, Anna Matveeva is a visiting senior research fellow.

Under a Creative Commons license, this post has been republished from The Conversation. Read the article in its entirety.

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Will China build a military presence in the Middle East?

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Beijing’s political and military ambitions in the Middle East have been the focus of intense speculation ever since China brokered the a & nbsp, Saudi-Iran peace deal, in March.

Although the majority of observers concur that China’s regional strategic objectives go beyond conventional energy trades, there is debate over whether it should send troops to work its power in the Middle East in order to remove the United States.

Those two inquiries are naturally related and moral. Beijing’s capacity to influence home and intra-regional dynamics is expanding as China becomes more involved in local socioeconomic, political, and diplomatic affairs.

Strategiticians can’t help but wonder what this means for America’s position in the region and the security structures its existence has enabled in light of the great-power competition between the US and China.

In the oil-rich place, China obviously has national security interests to safeguard. More than & nbsp, or 53 % of Beijing’s crude oil imports, comes from the Middle East, a source of hydrocarbons that Beijing cannot risk losing. It makes sense to believe that China would want to have troops in the area given this dependence and the danger it presents in case of a military issue. & nbsp,

reasonable, but is the presumption accurate? Perhaps no.

Production and transportation are the two factors that have an impact on Beijing’s power supply. The biggest dangers to the past are inter-state conflicts or local unrest. The difficulties in protecting strength transportation are more varied and include, in the worst-case scenario, a naval blockade, local instability, disruption to sea-lane communications, and piracy.

The risk of disturbance to production and transportation will continue to exist as long as China’s reliance on Middle Eastern energy resources is great.

The leaders of China, however, are pragmatic and make a distinction between risk and vulnerability. Beijing believes it is vulnerable but not necessarily resilient despite its significant reliance on Middle Eastern strength. This is due to the fact that both China and the Middle East depend on one another for their crude. There is a shared dislike of upheaval.

Moreover, China wouldn’t be the only survivor in the event of a regional problems that interfered with production or transportation. Oil-importing nations from Asia to Europe may be impacted, a circumstance that neither China nor the US wants. In addition, & nbsp,

Taiwan is currently the biggest possible battlefield between the US and China. Washington could use its government to obstruct or suffocate China’s energy transport lanes in the event of hostilities it in an effort to control Chinese operations in Taiwan Strait. China will likely need to fortify its strength transports from the Middle East in order to prepare for that situation.

However, the Chinese see this exposure from two very distinct angles. A US naval blockade on energy imports would worry China less than the prospect of a full-scale conflict with its power rival, on the one hand. Global power market upheaval would be important, but it is unlikely to be the deciding factor in any US-China conflict.

However, despite Beijing’s concerns about a possible US blockade of Middle Eastern energy imports, the cost-benefit analysis does not support the presence of Chinese troops there. Beijing would need to deploy at least a near-peer military in order for China to build efficient and ample capabilities to combat the US. Anything less would not solve China’s flaws in any case.

The US’s regional military budget currently exceeds$ 70 billion. China will have a$ 224 billion defense budget in 2023. Beijing would need to spend at least one-third of China’s overall defense budget if it were to match the level of military spending Washington is currently making in the area.

Given that the West Pacific, which receives the majority of China’s military interest, is its main theater and most serious geopolitical threat, this is obviously not cost-effective.

As a result, China has created alternative, less expensive strategies to reduce its challenges to energy security. Beijing has worked to mediate harmony agreements between long-standing rivals in order to put an end to regional wars.

It is integrating and entwining itself with the local players’ future economic architecture. Additionally, it is attempting to foster interconnectedness between China’s 1.4 billion people and energy-producing nations.

These resources, when combined, might be far more efficient than military equipment ever was. & nbsp,

Regarding China’s expanding appearance in the Middle East, whatever form it takes, National strategists have conflicting opinions. Many experienced American diplomats are also slowly excited to see China be enmeshed in a location that is plagued by conflicting conflicts, even though Washington is convinced that Beijing wants to replace the US as the country’s security guarantor.

However, regardless of whether the US finds it interesting or appropriate, China will still participate in the area in its own method. The country’s social, economic, and political existence will be a force to be reckoned with even if Chinese troops always deploy in large numbers to the Middle East.

The Syndication Bureau, which holds rights, provided this content.

At the Stimson Center in Washington, DC, Yun Sun serves as the director of the & nbsp, China & NbSp program and a co-director for the AndnBsP, East & NBP, Asia program.

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Cambodia navigates nexus of crises

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Climate change, the Covid-19 pandemic, and geopolitical conflicts have caused enormous disruptions to energy and food markets, driving prices to record highs, impacting the poor most severely. In Cambodia, hard-earned development gains were lost, and the country’s Human Development Index regressed to its 2018 level.

The cascading energy, food and financial crises impacted economic, education, employment and health outcomes, particularly for the most vulnerable. 

At the onset of the pandemic in 2020, the Cambodian government upscaled its social assistance. More than 700,000 poor and vulnerable households received cash assistance to offset the socioeconomic impacts of the pandemic.

In 2022, about 500,000 additional near-poor households were included to minimize their vulnerability to the impacts of floods and inflation.

Undoubtedly, these measures slowed the loss of development and the slide of vulnerable households into poverty. But immense pressure was exerted on public finances and the financial resources available for achieving the Sustainable Development Goals (SDGs) had to be repurposed. 

Even before the pandemic, achieving the SDGs was highly dependent on sustained investment, the adoption of effective policies, and the ability to implement them on time.  Although rapid economic recovery in Cambodia is attracting foreign direct investment, refueling the economic engines and creating jobs is still vulnerable to external shocks and uncertainties.

Interconnectedness

Although fuel and commodity prices have eased globally to varying degrees, concerns remain, as they are still above historical averages. Dependence on fossil fuels is causing a current-account deficit in the country.

In 2021, about US$57 million were spent on fuel subsidies in Cambodia. In January and February 2022 alone, the subsidy accounted for $31 million – resources that could have been invested in development. 

A floating community in Cambodia with rooftop solar panels (2019). Photo: UNDP

A 2020 study indicated that Cambodia could save $250 million by 2040 in direct power-system costs if the national energy grid mix was 14% solar photovoltaic, notwithstanding other indirect environmental and socio-economic impacts (such as a 38% increase in job creation). 

Such socio-economic gains cannot be underestimated. Also, the performance of the energy sector directly affects the country’s climate agenda. Cambodia increased its mitigation ambition with an emissions-reduction target of 41.7% by 2030. This included specific targets in areas such as energy efficiency. 

Cambodia remains highly vulnerable to climate-change impacts. The increased frequency of extreme weather events is making harvests more unpredictable and reducing crop productivity, threatening food security and farmers’ livelihoods, notwithstanding other types of loss and damage.

In 2020, a 50% prevalence of food insecurity was reported in Cambodia. A study by the Ministry of Economy and Finance assessed that Cambodia’s expected GDP could decline by almost 10% by 2050 because of loss and damage due to climate change. Recovery requires public investments that will further reduce fiscal space. 

The country is at a crossroads 

New opportunities can emerge from the crisis. Innovation is vital to renew development momentum and improve resilience. This would require new technologies, business models, policy frameworks, and social advances that prioritize synergies across energy, food, and finance. 

For instance, low-carbon farming offers the opportunity to optimize the use of fertilizers, raise agricultural yields, and reduce environmental impact. Clean energy improves the resilience of the agriculture sector and accelerates agri-food value chain improvement through secure irrigation, cold storage, and the use of agricultural residues for clean cooking – a health concern for rural women and girls. 

Energy efficiency plays a key role by bringing gains in different sectors of the economy and reducing energy sector vulnerability and energy uncertainty. The National Energy Efficiency Policy identified that Cambodia has the potential to save 12.5 terawatt-hours of energy (1.07 million metric tons of oil equivalent) by 2030 through energy efficiency measures. The financial savings could be reallocated to support development priorities and the SDGs. 

Recalibrating public financial management is vital through the integration of the SDGs in the budgeting process, exploring new approaches to revenue mobilization and reforming wasteful agricultural, food, and fossil-fuel subsidies. Cambodia has developed a methodology for monitoring and tracking SDGs-related expenditures in the national budget system, which is expected to be institutionalized soon. 

Finally, as a Least Developed Country, Cambodia has been benefiting from concessional financing, but once it graduates from LDC status, its financial architecture will progressively evolve.

Unlocking private capital and scaling up private-sector investment is key to expanding SDG-related investments. It will require removing barriers to direct financing from private institutions such as high interest rates, short repayment periods, and stringent collateral requirements, as well as prioritizing SDGs’ impact investments.

This is where blended finance can also de-risk investments in the agri-food sector and clean energy, to boost business but also food and human security. 

The road to resilience passes by the energy, food, and finance nexus. The risks posed by this nexus will become more significant because of growing demand for energy and food in a context of uncertainty and decreasing domestic and international financial resources for development.

A systemic approach to policymaking and investment that considers their interconnectedness, multi-sectoral nature and the need for multi-actor partnerships prioritizing synergies across energy, food, and finance is needed to break the vicious cycle of vulnerability. 

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